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Exhibit 10.5
DEBENTURE
$2,500,000
October 23, 1995
FOR VALUE RECEIVED, the undersigned DeVlieg-Bullard, Inc., a Delaware
corporation (hereinafter "Company"), promises to pay to the order of Charles E.
Bradley, Sr. (hereinafter "Holder") the principal sum of Two Million Five
Hundred Thousand Dollars ($2,500,000), together with interest as set out herein
at his office or such other place as Holder may designate in writing.
Investment Agreement: This Debenture is subject to the terms of an Investment
Agreement between the Company, the Holder and certain other parties dated May
25, 1994, as amended by a certain First Amendment to Investment Agreement dated
today (collectively, the "Investment Agreement"), a copy of which may be
examined during normal business hours at the Company's offices. The Holder is
entitled to the benefits of the Investment Agreement and all of the exhibits
thereto, and reference is made thereto for a description of all rights and
remedies thereunder. Neither reference to the Investment Agreement, nor any
provision thereof or security for the other obligations evidenced hereby, shall
affect or impair the absolute and unconditional obligation of the Company to
pay the principal amount hereof, together with all interest accrued thereon and
expenses, when due. Capitalized terms used herein and not otherwise defined
shall have the meanings set forth in the Investment Agreement.
Interest: From date of advance and thereafter until repayment, interest on the
principal outstanding from time to time hereunder shall accrue hereunder at the
rate of fourteen and one-half percent (14.5%) per annum compounded annually.
Interest shall be calculated on the basis of a 360-day year and shall be
computed for each payment period on the basis of the actual number of days
elapsed.
Payments:
A. Payment of Interest. Interest at the rate of eleven percent (11%) per annum
(simple interest) on the principal amount due hereof shall be due and payable
on the first day of each calendar quarter, in arrears, commencing on the first
day of January 1, 1996 and continuing until the entire principal amount hereof
shall have been paid in full. The balance of the interest on the principal
amount due hereof shall be due and payable on the Maturity Date.
B. Payment of Principal. The entire principal amount of this Debenture shall
be due and payable on the Maturity Date.
C. Penalty. A penalty of an additional seven percent (7%), on an annualized
basis, of the amount of any late payment shall be due and payable with respect
to any such late payment.
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D. Other Payment Provisions. All payments of principal and interest hereunder
shall be payable to the Holder in lawful money of the United States of America
and in immediately available funds, not later than 5 p.m. eastern time on the
date when due, without offset. Any payment coming due on a day which is not a
business day shall be made on the next succeeding such business day, and any
such extension of the time of payment shall be included in the computation of
interest hereunder.
Maturity Date: As used herein, the term "Maturity Date" means June 30, 2001 or,
if earlier, a date which is the thirty (30) days after the date on or by which
the Senior Subordinated Debentures are paid in full. As used herein, the term
"Senior Subordinated Debentures" means the two Debentures, each dated May 25,
1994 and each in the original principal amount of Four Million Dollars
($4,000,000), issued to, respectively, Banc One Capital Partners Corporation
and PNC Capital Corp.
Prepayment: This Debenture may be prepaid in whole or in part prior to May 25,
1996, but only upon payment of a prepayment penalty equal to four percent (4%)
of the principal balance so prepaid, and only upon ten (10) days written notice
to Holder. Thereafter, payment of any installment of principal or interest may
be made prior to the Maturity Date thereof without penalty but only upon ten
(10) days prior written notice to Holder. Prepayments made without the
required notice will not be credited against principal until ten (10) days
after receipt. Notwithstanding the foregoing, this Debenture may not be
prepaid prior to the payment in full of the Senior Subordinated Debentures.
Collateral: This Debenture is secured by certain collateral under the terms of
the Investment Agreement.
Subordination: The indebtedness herein is junior to certain debts of the
Company (i) as referenced in the Investment Agreement and the Intercreditor
Agreement referenced therein and (ii) as referenced in that certain
Intercreditor Agreement of even date herewith among The CIT Group/Business
Credit, Inc. and the parties to the Investment Agreement.
No Assignment: This Debenture and the obligations hereunder may not be assigned
by the Company without the prior written consent of Holder. Holder may freely
assign its rights hereunder.
Default and Acceleration:
A. If any of the below-listed events occur prior to maturity hereof, then a
default may be declared at the option of the Holder without presentment,
demand, protest or further notice of any kind (all of which are hereby
expressly waived). In such event the Holder shall be entitled to be paid in
full the balance of any unpaid principal amount plus all accrued and unpaid
interest and any costs to enforce the terms hereof, including reasonable
attorneys' fees, and to any other remedies which may be available herein, in
the Investment Agreement or under any applicable law:
1. Failure to pay any part of the indebtedness hereof when due;
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2. The sale, transfer or other disposition of all or substantially all of the
assets of the Company, or all or substantially all of the capital stock of
the Company; or
3. The occurrence of any default hereunder or as provided under the Investment
Agreement pertaining hereto.
B. No course of dealing between the Holder and any other party hereto or any
failure or delay on the part of the Holder in exercising any rights or remedies
hereunder shall operate as a waiver of any rights or remedies of the Holder
under this or any other applicable instrument. No single or partial exercise
of any rights or remedies hereunder shall operate as a waiver or preclude the
exercise of any other rights or remedies hereunder.
C. None of the rights, remedies, privileges or powers of the Holder expressly
provided for herein shall be exclusive, but each of them shall be cumulative
with and in addition to every other right, remedy, privilege and power now or
hereafter existing in favor of Holder, whether at law or in equity, by statute
or otherwise.
D. The Company shall pay all reasonable expenses of any nature, whether
incurred in or out of court, and whether incurred before or after this
Debenture shall become due at its Maturity Date or otherwise (including but not
limited to reasonable attorneys' fees and costs) which Holder may reasonably
deem necessary or proper in connection with the satisfaction of indebtedness or
the administration, supervision, preservation, protection of (including, but
not limited to, the maintenance of adequate insurance) or the realization upon
the collateral. Holder is authorized to pay at any time and from time to time
any or all of such expenses, add the amount of such payment to the amount of
principal outstanding and charge interest thereon at the rate specified herein.
E. The security rights of Holder and its assigns shall not be impaired by
Holder's sale, hypothecation or rehypothecation of this Debenture or any item
of the collateral, or by any indulgence, including, but not limited to:
1. Any renewal, extension or modification which Holder may grant with respect
to the indebtedness or any part thereof; or
2. Any surrender, compromise, release, renewal, extension, exchange or
substitution which Holder may grant in respect of the collateral; or
3. Any indulgence granted in respect of any endorser, guarantor or surety. The
purchaser, assignee, transferee or pledgee of this Debenture, the
collateral, any guaranty and any other document (or any of them), sold,
assigned, transferred, pledged or repledged by Holder, shall forthwith
become vested with and entitled to exercise all the powers and rights given
by this Debenture as if said purchaser, assignee, transferee or pledgee were
originally named as Holder in this Debenture.
Cost and Fees: The Company agrees that the Holder shall be reimbursed for any
and all costs and fees, including reasonable attorneys' fees and expenses,
incurred by the Holder
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or his affiliates in connection with (i) any suit, action or proceeding of the
Holder to enforce the provisions of this Debenture or any other loan document,
and (ii) any suit, action, claim or proceeding relating to this Debenture or
any other loan document asserted against the Holder of his affiliates by any
such party, in connection with which such other party does not prevail with
respect to substantially all of its claims. In the event any one or more of
the provisions contained in this Debenture or any other loan document shall for
any reason be held to be invalid, illegal or unenforceable in any respect, such
invalidity, illegality or unenforceability shall not affect any other provision
of this Debenture or such other loan documents, but this Debenture and such
other loan document shall be construed as if such invalid, illegal or
unenforceable provision had never been contained herein or therein. The
Company hereby declares, represents and warrants that it is a business or
commercial organization and that the indebtedness evidenced hereby is made for
the purpose of acquiring or carrying on a business or commercial enterprise
within the meaning of the laws of the State of Connecticut.
Definitions: The term indebtedness as used herein shall mean the indebtedness
evidenced by this Debenture, including principal, interest and expenses whether
contingent, now due or hereafter to become due, and whether heretofore or
contemporaneously herewith or hereafter contracted, and all other amounts due
under the provisions of the Investment Agreement. The term collateral as used
in this Debenture shall mean any funds, guarantees or other property or rights
therein of any nature whatsoever or the proceeds thereof which may have been,
are or hereafter may be hypothecated directly or indirectly by the undersigned
or others in connection with, or as security for the indebtedness or any part
thereof. The collateral and each part thereof shall secure the indebtedness
and each part thereof.
Power of Attorney: If payment of the indebtedness evidenced by this Debenture,
or any part thereof, shall not be made when due and at the Maturity Date, by
acceleration or otherwise, the undersigned hereby authorizes and empowers any
attorney of any court of record in the United States to appear for the
undersigned in court, or before any clerk thereof, and confess judgment against
the undersigned in favor of the Holder of this Debenture for the amount due
thereon with interest and costs.
Waiver of Trial by Jury: The Company agrees that any suit, action or
proceeding, whether claim or counterclaim, brought or instituted by the Holder
on or with respect to this Debenture or any event, transaction or occurrence
arising out of or in any way connected with the Investment Agreement or the
dealing of the parties with respect thereto, shall be tried only by a court and
not by a jury. THE COMPANY HEREBY EXPRESSLY WAIVES ANY RIGHT TO A TRIAL BY
JURY IN ANY SUCH SUIT, ACTION OR PROCEEDING. the Company acknowledges and
agrees that the Holder would not extend credit under the Investment Agreement
to the Company and purchase this Debenture if this waiver of jury trial were
not part of the Investment Agreement.
Usury Savings: This Debenture is subject to the express condition and it is the
expressed intent of the parties, that at no time shall the Company be obligated
or required to pay
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interest on the principal balance due hereunder at a rate which could subject
the Holder to either civil or criminal liability as a result of being in excess
of the maximum interest rate which the Company is permitted by law to contract
or agree to pay. If by the terms of this Debenture, the Company is at any time
required or obligated to pay interest on the principal balance due hereunder at
a rate in excess of such maximum rate, such rate of interest shall be deemed to
be immediately reduced to such maximum rate and the interest payable shall be
computed at such maximum rate and all prior interest payments in excess of such
maximum rate shall be applied and shall be deemed to have been payments in
reduction of the principal balance hereof. No application to the principal
balance hereof pursuant to this paragraph shall give rise to any requirement to
pay any prepayment premium due hereunder.
Controlling Law: This Debenture shall be construed in accordance with and
governed by the laws of the State of Connecticut, without regard to its
principles of conflicts of law. Venue for any adjudication hereof shall be
only in the courts of the State of Connecticut or the Federal courts in the
State of Connecticut, to the jurisdiction of which courts all parties hereby
consent. The Company intends that the courts of the jurisdiction(s) in which
the Company is incorporated and conducts business shall afford full faith and
credit to any judgment rendered by a court of the State of Connecticut against
the Company hereunder, and should hold that the Connecticut courts have
jurisdiction to enter a valid, in personam judgement against the Company
hereunder.
Severability: To the extent any provision herein violates any applicable law,
that provision shall be considered void and the balance of this Agreement shall
remain unchanged and fully enforceable.
IN WITNESS WHEREOF, the undersigned has caused this Debenture to be executed
and its seal affixed on the day and year first above written.
[Seal] DEVLIEG-BULLARD, INC.
Attest: /s/ Sharon E. Huguet By: /s/ William O. Thomas
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Sharon E. Huguet, Secretary William O. Thomas, President
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